Posted on 03/07/2016 8:00:43 AM PST by Swordmaker
It started as a break even . . . but it isn't now. It is very profitable.
I am an economist, remember? The price of eBooks is, like every product, determined by what people are wiling to pay.
Willing buyers, wiling sellers. Number of eBooks sales had doubled in the two years between Apple entering the market and the price going up. It's more than ten times the size today than what it was then. Absolute proof that market forces are satisfied with the market prices of eBooks. The average eBook pricing has slowly adjusted downward as competition has adjusted what the market will bear.
I am also a businessman, a retired CEO, remember?
When a 90% monopolist with huge resources is selling a product BELOW the wholesale price, it is always an artificial price that no one else can match to be able to meet and make a profit in competition. It's a price that is set bearing no relation to cost, demand, market realities, or the laws of economics. It is unsustainable on its own, except being supported by the revenues from other sources.
There is no rational reason in the world for a business to sell something at 50-60% of the price the business has paid for it, day-in-and-day-out, unless there is some advantage to be had. You cannot justify it by saying you are going to make the loss up selling some other product customers are brought to the store and attracted to buy at full value but that can't be explained for Amazon when those are ALSO drastically discounted, and you'd have to sell ten to twenty times the number of non-Best Sellers and non-A-list books at their average markups to make up for the sales of the below market price "loss leaders" as claimed. Nor can you claim you are doing it to sell a device you are selling at COST, intending to make it up with sales of the CONTENT, which you are selling at a LOSS. None of that makes any rational economic sense. The argument Amazon is making is a circle jerk smoke screen and mirrors intended to fool low information people like you to give them cover for what they are actually doing.
The only logical thing left is impermissible, illegal anti-competitive behavior: predatory pricing to keep any potential competitors from entering the eBook, and eBook reader markets. When it didn't work, and Apple entered the market and broke their shell game, Amazon went squealing to the DOJ, crying and weeping to the government mommy, whining that "Big old Apple kicked over my nice monopoly! Punish them for being so mean!"
“It started as a break even . . . but it isn’t now. It is very profitable. “
Not due to music sales which they are keeping artificially low but due to software sales which have margins of about 50%.
NO! The court said that every step was completely legal. Every contract was completely legal. It was one of those things that even though everything was completely legal separately, when taken as a whole, it was illegal. That is the Kafkaesque absurdity of all this. Multiple RIGHTS make a WRONG in the world of the Liberal mind.
“Number of eBooks sales had doubled in the two years between Apple entering the market and the price going up.”
Between! There was no between. Prices went up at the same time Apple entered the market.
NO, THEY DID NOT!
Just because Amazon is selling a product below what it costs does NOT mean it is a market price. Amazon did not allow the market to work. YOU MAKE IT CLEAR YOU DO NOT HAVE A CLUE WHAT MARKET PRICE EVEN MEANS!
We have market pricing now in eBooks. There was no market pricing when Amazon was a 90% monopolist then.
“The only logical thing left is impermissible, illegal anti-competitive behavior: predatory pricing to keep any potential competitors from entering the eBook, and eBook reader markets. “
Or, Amazon saw an opportunity to sell to customers a product at a lower price than the publisher cartels wanted to sell at. Amazon broke the publishers’ cartel and lowered prices to the consumer.
“NO, THEY DID NOT!”
er, YES they did!
They wanted to sell digital ebooks for the same price as hard copies even though the production/distribution costs were much less and wanted to keep that extra profit for themselves.
Amazon wanted them to reduce prices in line with costs AND wanted more to go to the authors.
Publishers wanted to keep insane profits while only giving the authors 10%.
You are obviously lacking in reading comprehension skills OR are deliberately ignoring the text of my posts.
YOU REALLY DO NOT HAVE A CLUE, do you?
Tex, you are getting close to earning that epithet of "idiot" again. Apple charges the SAME margin for music, movies, eBooks, apps, software, or anything else they sell on the iTunes stores. 30%. That margin covers everything. Cost of the iTunes operations, advertising, overhead, taxes, and Apple's PROFIT. . . it's all in that 30%. There is no special 50% margin on software that makes up a larger profit. I've read Apple's contracts and also Apple's 10K and 10Qs . . . they are quite explicit on this.
Quit pulling "Facturds" out of your rear end.
Quit making things up. You are pulling "facturds" out of your ass. . . and these statements are false on their face. Not a single thing you just wrote has any basis in fact. Not a single one. I have been following this battle from the onset and you are just lying now. I am done. TROLL.
“Apple charges the SAME margin for music, movies, eBooks, apps, software, or anything else they sell on the iTunes stores. 30%. “
That’s GROSS margin. Not NET margin. And you claim to be an economist.
Here is a link to explain it to you.
“Not a single thing you just wrote has any basis in fact.”
LOL! Apple, if fact strongly objected to the high price the publishers wanted to set saying it would kill ebook sales and thus proposed a mid-point between the publishers wants and Amazon’s prices.
“Apple charges the SAME margin for music, movies, eBooks, apps, software, or anything else they sell on the iTunes stores. 30%. “
LOL! You have NO idea what Apple’s margins are for iWork and iLife suites, Final Cut Pro and Aperture.
“To the extent a vertical agreement setting minimum resale prices is entered upon to facilitate either type of cartel, it, too, would need to be held unlawful under the rule of reason. This type of agreement may also be useful evidence for a plaintiff attempting to prove the existence of a horizontal cartel.”
Thank you. This is EXACTLY the Apple case and why they lost.
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